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Convenience – Anything, Anytime, Anywhere How Convenience Impacts the Food Industry – and How Food Manufacturers Need to Change in Order to Win

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Convenience – Anything, Anytime, Anywhere How Convenience Impacts the Food Industry – and How Food Manufacturers Need to Change in Order to Win Convenience – Anything, Anytime, Anywhere How convenience impacts the food industry – And how food manufacturers need to change in order to win Convenience – Anything, Anytime, Anywhere The German convenience market: behind the curve but catching up 04 The consumer’s perspective 06 Convenience is here to stay 06 The race to hyper-convenience 07 A chef’s perspective: HoReCas increasingly rely on convenience products 12 How food manufacturers need to change in order to win 14 Contacts 18 03 The German convenience food market: behind the curve but catching up Anything, anytime, anywhere – conveni- With the limited number of formats Fig. 1 – Growth ready meals ence is on the rise. In a fast-paced world and products available in Germany, this where no one ever stops, consumers convenience market still needs to mature +13% strive for convenience solutions in all and offers great growth potential for food aspects of their lives. Driven by these manufacturers and retailers. 5,346 drastic, fast-paced changes in consumer demand, every player along the food Current movements against plastic waste 4,750 industry value chain will have to change if and for sustainability have not stopped they want to remain relevant. the German convenience food market from gaining momentum. China1 and the US have already introduced countless convenience formats and prod- Sales in Germany of ready meals and ucts to meet consumers’ growing demand. other convenience products are expected Due to space constraints, many new to grow by 13 percent from 2010 to 2023 apartment buildings in China no longer to a total value of 5.3bn euros2. offer full kitchen facilities. People rarely 2010 2023 cook at home as a result and rely heavily One excellent example of this trend is the in m (manufacturer sales) on convenience food or eating out. REWE Group, which recently acquired the convenience specialist Lekkerland. The The future is already here: wholesaler is focusing on last mile delivery Alibaba has launched a new hyper- of convenience food products3 and non- convenience supermarket called Hema. food articles to gas stations and kiosks. This omnichannel format offers a perfect With this move, REWE is already gearing mix of online and offline features through up to win the battle for convenience-ori- the app that create an ultra-convenient ented customers, as Lekkerland brings customer experience. They range from in the expertise required to service the mobile product recommendations, fragmented convenience market. 62 percent of millennials in the in-store product scanning and seamless US have purchased prepared deli checkout to click & collect and home deliv- food, carry-out, delivery or fast ery in under 30 minutes. They even have food within the last seven days a kitchen in-store that will cook the fresh compared to only 47 percent of produce to your liking and a dining area in other age groups. which to eat. 1 United States Department of Agriculture. 2 Statista, 2019. 04 3 Convenience food includes all types of packaged pre-prepared foods that save time for consumers. For a detailed definition please refer to chapter 2.2. Convenience – Anything, Anytime, Anywhere Fig. 2 – Supply Chain of Convenience Products oeC Conmer oo mnctrer hoeer etier Food manufacturers need to adapt Convenience means change for Employers are pushing chefs to work more Consumer demand for innovative and everyone from consumers to the efficiently and save time and resources in more convenient products is increasing, HoReCa sector the kitchen. At the same time, consum- and food managers are faced with the Convenience means maximizing efficiency ers want to spend less time and effort challenge of offering new services and and leveraging timesaving potential for purchasing products and have the most shopping formats in order to stay relevant. the customer before, during and after convenient shopping experience possible. purchasing their products and services. Food manufacturers will need to recali- Some food manufacturers serve both brate key competences such as logistics, Assuming that convenience only impacts end consumers and HoReCa players, so sales, product development and pack- end consumers and retailers would be they cannot ignore either of the two per- aging to benefit from the convenience fatal, because it disregards a significant spectives. They need to develop a holistic movement. share of the market. In addition to end approach to convenience. consumers, we are increasingly seeing hotel, restaurant and catering players (HoReCa) strive for convenience solutions. 05 The consumer’s perspective Convenience is here to stay Busy lifestyles and higher incomes also demanding more optimal serving sizes As we have seen in the US and China, the Flexible working hours, part-time employ- to reduce food waste. An increase in single convenience trend is not a short-term ment and labor trends like multiple “mini- and two-person households will therefore phenomenon – it is here to stay. Monitor jobs” make it increasingly difficult to predict lead to greater demand for convenience Deloitte identified 4 key drivers that will how much time consumers spend at home. products. likely help the convenience movement gain This fact, along with a shift in consumer further traction. spending, leads to more out-of-home Urbanization consumption. The revenues of out-of-home The number of people living in German • Busy lifestyles and higher incomes players are expected to grow by 4 percent cities7 is expected to continue its growth • Decreasing household sizes in 2019, driven by rising numbers of con- trend from 73.1 percent in 1990 to sumer visits and increasing prices even 78.9 percent in 2030.8 This means busier • Urbanization at-home consumption further declines.4 lifestyles for an increasing number of • Aging population We are also seeing an increase in to-go people who, in turn, demand more efficient snacking during the day. 58 percent of and timesaving ways of shopping and con- consumers at least occasionally buy to-go venient products. snacks or meals to replace regular meals5. Aging population Decreasing household sizes The share of people aged 65 and over The number of single-person households will make up 27 percent of Germany’s in Germany rose from 16.0m in 2012 to population by 2030.9 This group requires 17.3m in 2018.6 Due to rising property close-to-home shopping opportunities or prices and limited space in urban areas, home delivery and reduced effort when new buildings often do not include space it comes to the preparation and cooking for food storage. Therefore, consumers of meals. Players such as Lieferando and are less likely to stock up on staples at a Uber Eats are already tapping into that retailer and more likely to shop impulsively opportunity and answering the demand for and for smaller portions. Consumers are convenience. 58 percent of customers at least occasionally purchase to-go snacks or meals in supermarkets or discount stores. 4 Monitor Deloitte analysis. 5 Convenience YouGov study, 2018. 6 German Federal Office of Statistics, 2019. 7 Cities with more than 2000 inhabitants. 8 Statista, 2019. 06 9 German Federal Office of Statistics, 2019. Convenience – Anything, Anytime, Anywhere The race to hyper-convenience assortments. In particular, end consumers Supermarket chains are introducing The demand for convenience solutions are demanding ultra-fresh products that in-store self-service salad and fresh sushi is affecting the products on the market they can consume immediately after bars, to name just a few of the ways retail- as well as the structure of their sales purchase with no further heating or ers are expanding their product portfolios. channels in terms of location, services and preparation. Not only are supermarkets store format. and discounters increasingly focusing on Traditional food manufacturers need to ready-to-eat products, other players like rethink their assortments as novel com- New convenience product categories bakeries have added these products to petitors succeed in pushing them out of Not all convenience product categories their assortments as well. the market. Players like eat happy, Natsu (please see 2.2 for a detailed definition of as well as such smaller local chains as the convenience food categories) are growing For instance, one leading German bakery restaurant brand Neni have successfully at the same pace. As more consumers chain already generates 50 percent of penetrated the segment. turn their focus to convenience, we see its revenues from hot and cold ready-to- two major developments on the product eat products such as salad, pasta and landscape: sandwiches. And as a reflection of the growing focus on convenience products, The emergence of the ready-to-eat some bakeries are even offering facilities category to prepare these convenience products Wraps, salads and other ready-to-eat in store that take up more space than the meals and snacks are conquering retailer customer-facing counter. Fig. 3 – Top 3 most demanded products in the ready-to-eat category at retailers10 moothie nwiche Salads moothie 10 Convenience YouGov study, 2018. 07 08 Convenience – Anything, Anytime, Anywhere Fig. 4 – Key aspect of convenience products oern eth orienttion nction, viie n inge erving ie ic time n interntion tine cging ee o rertion ciinetren orienttion The increasing relevance of the Focus on modern trends & product itself, so the packaging must make ready-to-heat11 category international cuisine the freshness and quality of preparation Retailers are expanding their assortments Demand is high for innovative products transparent for consumers. of chilled and frozen ready meals and that offer the modern style and taste of snacks that require heating, but no further international cuisine or follow the latest Smaller serving sizes preparation before eating. Sales for fro- food trends. German consumers are Food manufacturers need to offer smaller zen ready-to-heat meals grew by increasingly enjoying world cuisine, as serving sizes to appeal to the increasing 2 percent from 2017 to 2018 while overall demonstrated by the 17 percent increase number of single and two-person house- frozen food products experienced only in Asian restaurants since 2013.
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